Riding on the huge popularity of Unit Linked Insurance Products (ULIP) ,insurance industry emerged as the largest investor in the stock market during 20078 surpassing the foreign institutional investors , according to Life Insurance Council.
The council, in a briefing to the media in Mumbai on Thursday said the net investment by life insurance companies in the equity markets during 20078 was Rs.55,000 crore against an investment of Rs.53,400 crore by foreign institutional investors.
The investment by mutual funds in the same period was estimated at Rs.16,300 crore.
S B Mathur, secretary general of Life Insurance Council, an apex organisation of all life insurance companies in the country, said the investment by insurance industry in the stock market in the first four months of this financial year was about Rs.25,000 crore. During 20067, investment by insurance companies in equities was only Rs.20,000 crore.
U S Roy, Managing Director and CEO of SBI Life Insurance Company said it was for the first time that the investment by insurance companies in the stock market was higher than the foreign funds.
He said the large investment made by the industry has helped the market to stabilise. The volatility in the market could have been much more but for the large investment by the insurance companies, he said.
According to the Council, 80 percent of life insurance business during last financial year was received by way of ULIP.
Referring to the popularity of ULIPs among investors, industry leaders said it is not the insurance industry is promoting ULIPs. But it is the customers who are prefering to invest in ULIPs which helps them participate in the stock market.
A large number of ULIPs are selling briskly in many non-metro cities as well.
Besides, an official said it is not only in India but it is an international trend as more people are getting attracted to the markets.
Although, investment by the industry in the markets is on the rise, it continues to be the major investor in government paper.
According to the Council, investment by the industry in government securities during FY 2007 was Rs.2,75,000 crore while for the FY 2008, the investment (provisional) was Rs.3,37,000 crore.
The council said the life insurance industry had Rs.8,47,000 crore worth of assets under management as of March 31, 2008.
